Thailand’s Coup Builds Case for Emergency Rate Cut: Asean Credit

Thailand’s interest-rate swaps are signaling a cut in central bank borrowing costs to avert a recession after the army took over in a military coup.

The one-year onshore contract has fallen 20 basis points this month to 1.73 percent as a court ousted Yingluck Shinawatra as prime minister on May 7, martial law was declared on May 20 and the military took control yesterday. It’s now 27 basis points below the 2 percent benchmark interest rate after dropping to as low as 1.69 percent on May 21. Sharp declines in the swap preceded the last three rate cuts in March, November and May 2013.